Age UK 'should pay back elderly consumers after recommending more expensive E.ON tariff'

Ofgem is looking into claims that E.ON paid out £6 million a year to Age UK in
return for the charity pushing the more expensive tariffs to the elderly

Energy industry and charity watchdogs are investigating claims that Age UK has been promoting unfavourable gas and electricity rates in return for cash.

Britain's largest elderly charity is alleged to have been offering pensioners a special E.ON fuel tariff despite the cheapest available rate being significantly lower.

Ofgem, the energy regulator, has confirmed it is examining the claims and the Charity Commission also said it was looking at "any action that might be necessary".

The charity is also said to have made £21million by selling home, travel and car insurance provided by Ageas and £9.4million by selling funeral plans in a deal with Dignity.

Dr Dan Poulter, a member of the Energy Select Committee, said that both Age UK and E.ON had a "moral obligation" to recompense consumers.

"You have got to trust a charity that is purporting to support the best deal and get the best deal for vulnerable older people," the Tory MP for Central Suffolk and North Ipswich told Radio 4's Today programme.

"I think there is a moral obligation for the charity and on E.ON to recompense some of the most vulnerable energy consumers"

Dr Dan Poulter, a member of the Energy Select Committee

"That is something that I believe E.ON has exploited here. Perhaps the charity is not that commercially savvy. It has not necessarily got the best deal for its customers and I think there is a moral obligation for the charity and on E.ON to recompense some of the most vulnerable energy consumers, often on fixed incomes and poor income households."

E.ON has paid out £6 million a year to Age UK in return for promotion of its tariffs, according to The Sun, the equivalent of around £41 for every person signed up.

The newspaper said it had found details of the payments within Age UK's annual accounts.

“The Charity Commission should investigate whether Age UK has broken the rules because it's vital the public can have confidence in the good work charities do.”

Photo: Getty

The Charity Commission confirmed it was in contact with both Age UK and Ofgem “to determine what regulatory role the Commission might have and any action that might be necessary."

A Downing Street spokesman said: "As the Energy Secretary has set out, people expect a fair deal when it comes to their energy bills, and she has asked Ofgem to investigate these allegations and report back urgently.

"The fact that we have taken immediate action and asked Ofgem to investigate and report back urgently tells you that this is clearly an important allegation and one we need to get to the bottom of."

E.ON confirmed it had a "commercial relationship" with the charity but would not comment on the "sensitive" nature of the amount paid to Age UK.

The company argued the £1,049 annual deal was a two-year fixed deal which, although more expensive than its cheapest rate, was favoured by some customers looking for longer-term certainty over price increases.

A spokeswoman said: "Our current Age UK tariff was the cheapest product of its type in the UK when it was launched in January. Customers can switch between products at any time without incurring any costs.

"If a customer is on a fixed tariff and they opt in for a price alert, and if we issue a new tariff that is cheaper, we will automatically notify them of that.

"But in line with Ofgem's rules we can't switch people without their consent."

In January, Age UK criticised the big six energy firms for overcharging and warned that more than 4.1 million older people were "anxious" about high heating costs.

A spokesman rejected allegations that it has been pushing expensive tariffs and also the "interpretation of the figures".

"Age UK has worked with E.ON for the past 14 years, openly and above board, and they have been generous supporters of our charity over and above the number of customers on the tariff,” he said.

"Energy prices change all the time and we have always advised older people to look out for new good deals and we will continue to do so"

Age UK spokesman

"We launched the most competitive, fixed two-year energy tariff available anywhere on the market on January 20 this year, with no exit fees.

"Energy prices change all the time and we have always advised older people to look out for new good deals and we will continue to do so."